Rare Coins: a Safe Haven for Stability in Investment Value ~ The International Finance

Monday, 25 June 2012

Rare Coins: a Safe Haven for Stability in Investment Value

Financial markets with their volatility have seen most traders lose money while some going to the extent of taking their own lives. Stocks can depreciate in value overnight as has been witnessed in the string of stock market crashes and global meltdowns. Stocks therefore can be a bitter pill to swallow for investors especially whose risk appetites are low.

It is a general principle that investments are considered good if they bring worthwhile returns. Several investment performance measurement methods have been engineered in the financial world to bring into focus how investments perform. Example of such performance indicators are return on investments (ROI), return on equity (ROE) amongst many others.

Stability in value
Unlike stocks which fluctuate in value overnight or in minutes of trading, coins are preferred because of their stability in value. It is a common mantra in the financial world that high value comes with a higher risk profile but with investments in rare coins, this is further from the truth. The jumpy nature of stocks and other financial instruments has made it almost impossible to forecast their value unlike coins which one can tell with certainty what they are worth. The stability in coins value is therefore unparalleled.
Spreading the risk
Portfolio diversification is a common practice in finance done with the aim of reducing the risk exposure of stock and other financial assets. A portfolio is basically a mixture of stocks with various risk-return profiles combined well to bring the overall risk level under manageable confines. With coins, diversification is relatively less costly compared to stocks since one can buy several coin specimens and never get messy with them. The returns are still in check even with those diversified coins making it a safe investment but still rewarding.

Price movement and predictability
The price movement of stocks can take a downward trend or upward trend based on the forces of demand and supply. Rarely will you hear of a given stock or financial instrument having appreciated in value over a long period of time without taking a dip at some point. Coins on the other hand have always appreciated in value at least as far as history can record.
Enhancing tradability
Measures are normally adopted to make stocks more tradable and this can be through stock splits. This is where the value of the stock say $40 is split into two or three so that many people can afford it therefore the pressure of demand occasioned by such a split can help push prices up. This strategy has however not been successful in all cases as some stocks have failed to pick up despite the splits. The value of coins unlike that of the stocks does not depend on either splits or any market information. One is assured of an ever growing value in coins that doesn't rise and wane depending on market forces of demand and supply. The worst in terms of value investors in coins can experience is when they remain stagnant for some bit of time then appreciate again.

Thus an investment in coins can perfectly relieve you of the tension and risk exposure that you face on a daily basis in the financial markets. The immunity they have to news and market information makes them withstand and sail through periods of tough economic conditions without dipping in value.

About Author

Amit Singh is a founder of Theinternationalfinance.com he share his immense knowledge of Finance in this blog.

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